IRS Installment Agreement: Guide on IRS Payment Plans
Last updated 03/12/2026 by
Andrew LathamFact checked by
Sammi TonerLike millions of Americans, you may owe back taxes but can’t afford to pay them all at once. While you might consider tax forgiveness options, one of the most accessible solutions is setting up an IRS installment agreement, or payment plan.
Although other tax relief programs like the Offer in Compromise let you settle your debt for less, installment agreements are much easier to qualify for. In fiscal year 2024, the IRS collected over $16 billion through these agreements, while only a small percentage of offers in compromise were approved.
In 2024, the IRS collected more than $16 billion through installment agreements—up 12% from the prior year.
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What is an IRS tax payment installment agreement?
An IRS installment agreement lets you pay off your tax debt over time through monthly payments. It’s similar to how you’d pay off a loan. These plans are available for both individuals and businesses and can be set up online in many cases.
There are multiple types of installment agreements available depending on how much you owe and your financial situation.
How are installment agreements different from short-term payment plans?
Short-term payment plans are available to people who can pay their tax bill in full within 180 days. These plans have no setup fee, but penalties and interest still apply. In contrast, long-term installment agreements allow for repayment over several years but often come with a setup fee.
Which installment agreement is right for you?
The IRS offers several types of agreements, each with different eligibility requirements.
Guaranteed installment agreement
If you owe less than $10,000 and have filed all returns on time in the past five years, you may qualify for a guaranteed agreement. You’ll have up to 36 months to pay off your debt and won’t need to submit a financial statement.
To qualify, you must:
- Owe $10,000 or less (excluding interest and penalties).
- Have filed and paid taxes on time for the past five years.
- Not had an installment agreement in the last five years.
- Agree to pay off the balance within 36 months.
Streamlined installment agreement (simple payment plan)
If you owe less than $50,000, you can apply for a streamlined plan and repay your debt over up to 72 months—or even up to 84 months in some cases. No financial statement is needed if you apply online.
Payment methods: Must use direct debit or payroll deduction.
Partial pay installment agreement (PPIA)
If you can’t afford to pay your full tax debt, a partial pay agreement allows you to pay what you can afford over time. After evaluating your financials, the IRS may forgive the remaining balance once the agreement ends.
To qualify, you must:
- Owe more than $10,000.
- Be current with all tax filings.
- Not be in bankruptcy or have a pending Offer in Compromise.
- Submit a financial disclosure form (Form 433-F).
In-business trust fund express agreement
This option is for businesses that owe $25,000 or less in payroll taxes. You can apply online, and you won’t need to submit financial documents. You must repay the debt within 24 months.
Routine installment agreement
If your debt exceeds $50,000 or you need more than 72 months to pay, you may need a routine agreement. This requires submitting a financial disclosure and might include a federal tax lien.
Approval is not automatic: Taxpayers with balances this large benefit most from working with tax relief specialists who understand the disclosure requirements and can negotiate favorable terms on your behalf.
Making payments on your installment agreement
Once approved, you’ll make monthly payments. If you owe over $25,000, direct debit is mandatory for individuals. For businesses, direct debit is required if you owe more than $10,000.
Payment options: direct debit, payroll deduction, check, money order, or credit card.
Setup fees (2025):
- $31 for direct debit online (waived for low-income).
- $69 for non-direct debit online.
- $107–$178 by phone/mail/in-person (reduced for low-income).
Other fees: $10 to revise or reinstate online (may be waived), or $89 by mail or phone.
WEIGH THE RISKS AND BENEFITS
Here is a list of the benefits and the drawbacks to consider.
Frequently asked questions
How many installment agreements did the IRS approve last year?
In fiscal year 2024, the IRS collected over $16 billion through installment agreements. The exact number of agreements is not published yet, but the figure reflects strong reliance on this repayment method.
What’s the difference between a short-term plan and an installment agreement?
Short-term plans last up to 180 days and have no setup fee. Installment agreements last longer and usually have fees, but offer more flexibility.
Can I have two payment plans with the IRS?
No. You can only have one active agreement at a time. However, you can add new tax debt to an existing plan.
What if I default on my IRS payment plan?
The IRS may cancel your agreement and issue a CP523 notice. Your property or wages may be subject to enforced collection if you don’t act promptly.
Can I pay off my agreement early?
Yes. There’s no penalty for paying off your plan early—and doing so can help you save on fees, interest, and penalties.
Are there any exceptions for low-income taxpayers?
Yes. Low-income filers may qualify for reduced or waived setup fees, especially if applying online and using direct debit.
Key takeaways
- In FY 2024, the IRS collected over $16 billion via installment agreements
- Installment agreements are easier to qualify for than offers in compromise
- Fees are lower for direct debit and waived for low-income taxpayers
- You can apply online for faster approval and lower costs
- Penalties and interest continue to accrue until the balance is paid in full
Andrew is the Content Director for SuperMoney, a Certified Financial Planner®, and a Certified Personal Finance Counselor. He loves to geek out on financial data and translate it into actionable insights everyone can understand. His work is often cited by major publications and institutions, such as Forbes, U.S. News, Fox Business, SFGate, Realtor, Deloitte, and Business Insider.
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